Reading Charts in Real Time

[thalestrader 14]

  subterfuge said:

you're annoyingly good thales

 

If I were that good I'd still be long instead of being flat.

 

Best Wishes,

 

Thales

[Gabe2004 10]

My latest entry.

Firtst 1/3 target hit.

 

Gabe

[thalestrader 14]

  forrestang said:

My question is, does anyone spy a reason that might preclude one from taking the trades at the top, but being interested in the ones at the bottom?

 

Hi Forrest,

 

First of all, your charts are much improved - much easier to see what you are looking at with this color scheme.

 

While the EURUSD and GBPUSD had larger rallies, I do not know if it is right to characterize the rallies on the EURJPY (approx +48 ticks from BO to rally high) and the GBPJPY (approx +45 ticks from BO to rally high) being failed BO's. Each broke through a near term resistance point and each rallied into an observable zone of resistance. Not every breakout is going to run for 100+ ticks or more.

 

One thing I would like to clarify is this: When I say that one needs to cut one's losses and let one's profits run, I do not mean that you should let your profits run into a loss. If price moves +40 or more ticks from your entry, by all means move your stop to capture some of that profit!

 

You see, there is a difference between the trader who moves his or her stop loss to, say, +7 ticks after price has moved to +20, and the trader who hurriedly exits out at market with a +7 tick profit because price has slipped 5 ticks after having made an inital +12 tick move on the breakout. For example, I shorted the 6B today 1.6020. Price dropped to 1.6006, and then bounced to 1.6017, and then declined again, but held above 1.6006. I moved my stop to breakeven, and I was stopped out at breakeven. Price rallied to 1.6046 and then weakened. I again sold short at 1.6005. As price declined in my favor, I continually moved my stop down, trailing the market by 10-15 ticks. If you look at a 1 minute chart of the 6B, you should be able to figure out how and why I allowed myself to get stopped out at 1.5955. The low of the session was 1.5941, and after I was stopped out, I do not believe price traded lower than 1.5952.

 

What's my point? My point is that you need to let your profits run. But, you need to keep your profits as well. You do not want to be the trader who gets scared and markets out with a handful of ticks at best. But you also do not want to be the trader who catches a breakout and watches it run 100 ticks without pause and then watches as it runs to a 20 tick loss waiting for price to catch itself and provide a natural stopping point. Now, how to trail a stop so as to keep the trade alive while not giving up more open trade equity than you have to is not something that I can easily describe. If I catch a big move off the breakout, I will usually drop down to a 1 minute chart to manage the trade. I also use the one minute chart if the trade does not act as I anticipated. I had a short trade on the 6E a week or so ago where I was stopped in at I think 1.4472, and price halted its decline at about 1.4468. I then watched as price very clearly, distinctly, and smoothly traced out a little rally high to 1.4476 and then declined to 1.4471, where it paused, and pasued, and paused, dancing around 1.4471-4473. Guess where my stop went? It went from about a -40 tick stop to a -5 tick stop at 1.4477, where I was stopped out. As it happens, rather than breakdown or break up, the 6E instead traded in a 40-50 tick range until well into the next day.

 

Was that a "failed" breakout? I guess it was as close to a failure to act as anticipated as I have ever experienced absent some external news-driven catalyst. However, identified properly, most break outs will see price travel to at least the next logical S/R level before reversing back through the break out point. Knowing this, manage your trades and trail your stops accordingly.

 

Best Wishes,

 

Thales

[Gabe2004 10]

2nd 1/3 was closed manually as I saw some abnormal chart activity.

Turns out there were news from Japan (retail sale) after which the market started to turn down and i modified the stop loss to retain some of my profit on the last 3rd.

Not too happy with the trade but market conditions dictated a change in the plan.

 

Gabe

[thalestrader 14]

Hi Folks,

 

A last look at the GBPUSD before bed. A short at 1.5940 with a target of 1.5850 and a 1.5981 stop loss looks good to me.

 

Best Wishes,

 

Thales

[forrestang 10]

  thalestrader said:

Hi Folks,

 

A last look at the GBPUSD before bed. A short at 1.5940 with a target of 1.5850 and a 1.5981 stop loss looks good to me.

 

Best Wishes,

 

Thales

 

I've got that with a different initial target, along with a E/U short if it goes off. R:R on both as i have them aren't great.

Edited October 1, 2009 by forrestang

[forrestang 10]

  forrestang said:

I've got that with a different initial target, along with a E/U short if it goes off. R:R on both as i have them aren't great.

 

Wow, something weird going on with the E/U pair, but target was hit!!

[thalestrader 14]

  thalestrader said:

Hi Folks,

 

A last look at the GBPUSD before bed. A short at 1.5940 with a target of 1.5850 and a 1.5981 stop loss looks good to me.

 

Best Wishes,

 

Thales

 

Hi Folks,

 

This would have been either a -15 tick loss or a break even trade at best. I have placed an explanation on the chart.

 

Best Wishes,

 

Thales

[brownsfan019 17]

Saw this on the ZN 15 min. I didn't trade it directly but was long into that move up. Not sure if this qualifies as an exact setup as Thales uses, but thought I'd share.

 

[thalestrader 14]

Hi Folks,

 

I'll be watching how price acts right here for clues on ES. If price holds above the represented support zone and manages a rally back above yesterday's low, I would anticipate a rally that may exceed yesterday's high. Targets 53.25, 60, 65.75.

 

Best Wishes,

 

Thales

[thalestrader 14]

  thalestrader said:

Hi Folks,

 

I'll be watching how price acts right here for clues on ES. If price holds above the represented support zone and manages a rally back above yesterday's low, I would anticipate a rally that may exceed yesterday's high. Targets 53.25, 60, 65.75.

 

Best Wishes,

 

Thales

 

 

I'm not convinced that ES won't attempt to hammer out a low of day right around here, but should this level fail to hold then the next support I would be looking at is shown is this chart.

 

An aggressive long entry would be a buy stop at 39.75. For anyone trading Taylor, this is a Buy Day, which means we should anticipate a decline into support that will enable one to position oneself long into a subsequent rally.

 

Best Wishes,

 

Thales

[thalestrader 14]

  brownsfan019 said:

Saw this on the ZN 15 min. I didn't trade it directly but was long into that move up. Not sure if this qualifies as an exact setup as Thales uses, but thought I'd share.

 

 

 

Looks great, Brownie! Thank you for sharing and keep them coming. What this thread should help folks se is that price does trace out patterns that repeat across markets and across timeframes. Your 10 year note chart displays a long opportunity that is very similar that presented on the GBPUSD/6B two nights ago and posted here in this thread and reproduced here below.

 

 

Best Wishes,

 

Thales

[thalestrader 14]

  thalestrader said:

An aggressive long entry would be a buy stop at 39.75.

 

A somewhat better entry would be a buy stop at 40.25 if 36.75 holds.

 

Best Wishes,

 

Thales

[thalestrader 14]

  thalestrader said:

A somewhat better entry would be a buy stop at 40.25 if 36.75 holds.

 

Best Wishes,

 

Thales

 

You know what they say, "if you don't bet, you can't win." And this is followed by, "If you lose all your chips, you can't bet." So stop loss is in place and it is up to the market.

 

Best Wishes,

 

Thales

[thalestrader 14]

  thalestrader said:

You know what they say, "if you don't bet, you can't win." And this is followed by, "If you lose all your chips, you can't bet." So stop loss is in place and it is up to the market.

 

Best Wishes,

 

Thales

 

 

Stopped out - 3.5/-4. And will await a clear opportunity. Today was unusual in that rather than hold my short from the break of the first 5 minute low, I stopped and reversed at what I had anticipated to be support. As a general rule, I do not fade gap opens (and yes, I do believe that gaps are real and important). I do poorly whenever I try to fight the day's trend. A lesson I find myself needing to learn and re-learn over and over again.

 

Best Wishes,

 

Thales

Edited October 1, 2009 by thalestrader
spelling

[thalestrader 14]

ES is now stalling at the aforementioned 32.50-28.50 support.

[thalestrader 14]

  thalestrader said:

Today was unusual in that rather than hold my short from the break of the first 5 minute low, I stopped and reversed at what I had anticipated to be support...

 

I can only imagine that it is my present condition of lack of sleep and abundance of stress, but I am going to try once more to fight this decline with a long. If I lose on this one, I will be negative on the day on the ES (right now I am slightly ahead +6.25/+6.25/-3.5/-4) and I won't touch it again until tomorrow.

 

Best Wishes,

 

Thales

[thalestrader 14]

  thalestrader said:

I can only imagine that it is my present condition of lack of sleep and abundance of stress, but I am going to try once more to fight this decline with a long. If I lose on this one, I will be negative on the day on the ES (right now I am slightly ahead +6.25/+6.25/-3.5/-4) and I won't touch it again until tomorrow.

 

Best Wishes,

 

Thales

 

My approach to the ES today is terrible. I have no idea why I would try twice to trade completely opposite of the manner I know to be best for me. I am bring my stop to -.75 on the whole position. If it sinks back there then whether it rallies or not, I just want to be done with this thing today.

 

Update: out -.75/-.75 (+6.25/+6.25/-3.5/-4.0/-.75/-.75)

 

Total for the day +3.5 or +1.75/contract after three trades ... and to think, I had a closed profit of +12.50 or +6.25/contract a mere 40 minutes in to the day session.

 

Best Wishes,

 

Thales

[forrestang 10]

I usually don't watch currencies in the day. But what do you fine gentlemen think about these two scenarios?

 

Blue line is the breakdown through support for the short.

 

Green line is the first anticipated area where price would find support.

 

And notice on a macro level, each High circled w/the red dot is right at about the 50% retracement from the major swing High to Low.

 

 

------EDIT--------

I just noticed after posting, G/J might have some support sooner than the line I posted. It's slightly to the left, that little wedge that we based an entry the other day off of.

[thalestrader 14]

  forrestang said:

I usually don't watch currencies in the day. But what do you fine gentlemen think about these two scenarios?

 

Blue line is the breakdown through support for the short.

 

Green line is the first anticipated area where price would find support.

 

And notice on a macro level, each High circled w/the red dot is right at about the 50% retracement from the major swing High to Low.

 

 

------EDIT--------

I just noticed after posting, G/J might have some support sooner than the line I posted. It's slightly to the left, that little wedge that we based an entry the other day off of.

 

 

Hi Forrest,

 

I see what you are seeing. Just be aware that any breakouts that occur between now and tomorrow's NFP data release may be shallow and may reverse at nearby S/R. Of course, there is nothing to say that any breakouts may not travel for 100's of ticks, either. But from what I have seen, the 24 hours preceding NFP and the 24 hours preceding Fed Minutes more often than not produce range contraction and coiling, and most breakouts serve only to better define a range rather than representing a break out of or tradable expansion of the current range. As always, there are always exceptions to the rules.

 

Best Wishes,

 

Thales

[forrestang 10]

Do you usually stand aside during such times?

[thalestrader 14]

  forrestang said:

Do you usually stand aside during such times?

 

No, not necessarily, as the market will often show its hand before the news. But on a breakout you should expect price to move swiftly in your favor. If you buy or sell a breakout and price goes no where, or simply drifts, then it might be wise to consider whether or not to keep the trade open or whether you should close it and wait for further direction from price.

 

Best Wishes,

 

Thales

[thalestrader 14]

  thalestrader said:

My approach to the ES today is terrible.

 

Hi Folks,

 

I would advise anyone who follows this thread to use my trading of the ES today as a lesson on how not to trade.

 

1) I shorted the break of the low of the first 5 minutes on a gap open lower. I have discussed gap trades elsewhere. I have made more profits off of paying heed to gaps and the TVGR (Trader Vic Gap Rule). If a gap is not filled within the first 15 minutes, it will likely not be filled that day. Trade in the direction of the gap. I should have been adding to my position at breaks of support. Instead ...

 

2) ...As seen from the chart, the areas I identified as Support zones were accurate. The initial decline found temporary support at 1036.25, which was the lower boundary of the 36.25-39.25 support zone represented by the upper rectangle. I covered my short and reversed to a long position here. I should have held my position, and added with a sell stop at 1036. And if that wasn;t bad enough ...

 

3) ... Price fell to the next support level, where again, I tried to fade the trend. As you can see, this support zone contained nearly the whole of price action from 11:30 AM EDT until moments before the close.

 

I had the relevant S/R levels clearly identified. But knowing where S/R is means little if you do not trade price action as it plays itself out. I clearly traded S/R, but I did not trade price. As Db would say, price reaching an S/R level is not in and of itself a signal to do anything. Price action was clearly pointing to lower prices. I was blindly buying when had I just opened my eyes, I'd have been selling all day long.

 

What I did right today was I shorted the break of the first 5 minute low. I held to a logical support level, and the profit was 6.25 points/contract. When I did go long (and today it was wrong to be long) what I did right was I cut my losses. As a result, even though I only profited on 1/3 ES trades, my net for the day was still 1.75 ES points/contract traded.

 

What I did wrong was that absolutely disregarded what I know to be as safe and sure a play as there is: A gap open that does not fill, especially one that extends immediately in the direction of the gap, tends to auger trend days, where the market opens at one end of its range and closes at the other.

 

I do not mind losing trades. Losses happen and are part of the game. I do mind trading like the me of 10 years ago. I know better.

 

The only explanation I can find is that I have had little sleep and much sadness over the great loss our family has suffered this past week. But that is no excuse.

 

I'm taking tomorrow off.

 

Best Wishes,

 

Thales

[subterfuge 10]

Interesting Thales. I pretty much soley trade the ES and so take special notice of your ES posts as i check this thread throughout the day.

 

When you posted your long I even thought "this doesn't seem like a 'thales' type trade" lol. I was actually short at the time aswell, so I was hoping for a rare loser from you!!

However, I was nearly tempted to take some off the table. Not just because of your post, but statistically Thursdays have the best probability of a gap fill, and a gap of less than 3 handles (like today) fills the gap a very large percentage of the time, so the gap fill had a lot going for it today. As it turned out it was a rare failure for both the gap statistic play and your trade!

 

Having said that, I made some losing trades in the evning session and ended about BE for the day. Found myself getting chopped up again as seems to be the case for me recently. Generally up about 4 points from globex trades and maybe a trade after teh open, and then tend to give most of them back later. Im looking at moving to a slightly larger timeframe possible. Too many trades and too many false breaks.

 

Anyway, thanks for your updates.

[thalestrader 14]

Post 55 of this thread shows another example of a gap down trend day. I also psoted an ES trade somehwere here (and by here I mean at TL, but not on this thread) where I followed the market down after an opening gap. I do not know in which thread I posted it, but if you can find it, that would be the example as to how to trade a day like today.

 

Today I traded stupid.

 

Best Wishes,

 

Thales